Private Power Wins

In a fight between public and private power on two Southern projects, private power scored two notable victories last week. In the first project. Congress approved a plan to let a private company take over power development on Alabama's Coosa River, once ticketed for a public-power project. In the second, President Eisenhower directed the Atomic Energy Commission to buy its additional power in the South from private sources, and ruled against expansion of the Tennessee Valley Authority to meet AEC's added power demands.

On to Coosa. The Coosa River project was a clear-cut case for private enterprise.

Under 1945 legislation, Congress had authorized the Army engineers to develop power, navigation, and flood-control features on a 100-mile stretch of the Coosa River between Montgomery and the Georgia state line. The money was never appropriated, and the Alabama Power Co., which already serves 520,718 people in the area, drafted its own plan. It offered to build five new dams (see map) along the Coosa, with flood-control features and provisions for future navigation improvement. Cost of the project: about $100 million for an additional 360,000 kilowatts of power.

Looking at the plan last week, even the strongest public-power boosters found little to complain about. Congress swiftly passed a bill suspending the old federal program; President Eisenhower is expected to sign it this week.

The decision against TVA stirred up a storm. AEC now buys its power from TVA. But by 1957, expanding AEC plants at Paducah, Ky. and Oak Ridge, Tenn. will need another 600,000 kilowatts of power, much more than TVA can supply. Instead of building up TVA to carry a bigger load, the Administration wants AEC to sign a 25-year contract with two big private-power outfits, Middle South Utilities, Inc., and the Southern Co. Together, the two plants would build a $107 million power and transmission plant at West Memphis, Ark., on the western edge of TVA territory, about 200 miles from AEC's Paducah, Ky. installation. The private companies would then turn over their new power to TVA, thus releasing an equivalent amount of TVA power from local use for AEC. All costs up to $107 million would be borne by the Middle South-Southern group, but anything beyond that up would be shared by AEC.

Illegal? Supporters of public power promptly charged that the whole idea was illegal. They said that under the 1946 Atomic Energy Act, AEC is authorized to make 25-year contracts "in connection with" its needs, but not to act as a "broker" between private power companies and TVA.

AEC itself had voted against the plan, 3 to 2, though it said it would obey the President's order. Furthermore, California's Democratic Representative Chet

Holifield introduced a letter from AEC chairman Lewis Strauss saying that two previous AEC-private-power contracts had cost far more than originally estimated. One plant built near Paducah cost $58 million more than estimates, with annual power charges $2,000,000 higher than expected; another built near Portsmouth cost $32 million above the estimates, with annual charges increased $1,600,000.

The Middle South-Southern plan, if it stays within estimates, would save taxpayers an initial investment of $100 million, but yearly power costs to AEC would be higher than if TVA supplied the power. Much of the difference would be made up by the fact that private companies must pay state and local taxes (TVA pays out a specified sum in lieu of taxes), have to borrow money at higher interest rates, would need to build new transmission lines. Over the years, said AEC Manager Kenneth Nichols, private power would actually cost the Government more than $20.5 million a year v. $16.8 million for comparable deliveries from TVA.

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